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Petitioners Vs VS: First Division
Petitioners Vs VS: First Division
SYNOPSIS
The Supreme Court found the writ of sequestration issued against OWNI not
valid because the suit against Manuel H. Nieto and Jose L. Africa as shareholders in
OWNI was not a suit against OWNI. The Court previously held that failure to implead the
corporations as defendants and merely annexing a list of such corporations to the
complaints was a violation of their right to due process for it would in effect be
disregarding their distinct and separate personality without a hearing. Furthermore, the
PCGG issued the writs of sequestration beyond the period set by the Constitution. The
petitions were denied.
SYLLABUS
PARDO , J : p
What is before the Court is a joint petition 1 to annul and set aside the decision 2 of
the Sandiganbayan dismissing petitioners' complaint for injunction with damages against
Victor A. Africa, Jose L. Africa, + Manuel H. Nieto, Jr. and Juan de Ocampo 3 and the
resolution 4 denying petitioners' motion for reconsideration.
The Facts
On August 28, 1990, the Presidential Commission on Good Government (PCGG)
sent Corporate Secretary Victor A. Africa of Oceanic Wireless Network, Inc. (OWNI), a
letter dated August 3, 1990, directing him to send notices to all stockholders of record of
OWNI for special stockholders' meeting to be held on September 17, 1990. He was
required to issue one qualifying share each to PCGG Commissioners Maximo A. Maceren
and David M. Castro from the unissued shares and to record the transfer in the stock and
transfer book of OWNI. Failure to comply within ve (5) days from receipt thereof,
Assistant Solicitor General Ramon S. Desuasido would be designated as acting corporate
secretary.
On September 17, 1990, during the special stockholders' meeting of OWNI, PCGG
voted all the Class "A" shares in the election of directors and elected to the board of
directors Commissioners Maximo A. Maceren, Cesar O. V. Parlade and Melquiades C.
Gutierrez representing the Class "A" shares and Colin Brooker and Terry Miller representing
Class "B" and "C" shares. The new board of directors then elected Commissioner Maximo
A. Maceren as Chairman of the Board, Melquiades C. Gutierrez as President, Assistant
Solicitor General Ramon S. Desuasido as Acting Corporate Secretary and Almario P.
Velasco as Acting Treasurer. None of the registered Class "A" shareholders of OWNI was
present in that special stockholders meeting.
PCGG sequestered the Class "A" shareholding in OWNI amounting to 63,573 shares
out of the total 105,955 outstanding capital stock, or about 60% of the outstanding capital
stock, and PCGG voted all the Class "A" shares by virtue of the following writs of
sequestration, to wit:
(a) The order of sequestration, dated April 11, 1986, which covers shares of
Jose L. Africa, + Roberto S. Benedicto, + Andres L. Africa and Victor A. Africa in
OWNI. PCGG Commissioner Mary Concepcion Bautista signed the sequestration
order.
(b) The writs of sequestration, dated June 15, 1988, were issued by the
PCGG against Aerocom, Polygon on August 3, 1988 or one day after the
constitutional deadline as provided in Section 26, Article XVIII of the 1987
Constitution. Furthermore, no court case has been led against Aerocom,
Polygon, Belgor Investment Corp., Silangan Investors & Manages, Inc. and OWNI.
(d) from making any expenditures for the use and bene t of Digitel and
pursuing any and all papers/communications led by OWNI with
the National Telecommunications Commission relative to the
requirements of Digitel to comply with Digitel's franchise;
"(5) ordering the respondents in Civil Case No. 0127 their o cers, agents,
representatives and other persons acting under their orders/instructions:
(a) to vacate OWNI's o ce premises at the Electra House, Esteban St.,
Legaspi Village, Makati; (b) to turn over all the corporate records of OWNI
to petitioner Jose L. Africa, et al.; and (c) render an accounting of all
transactions undertaken by them in the name or in behalf of OWNI,
including disbursement of corporate funds;
"(6) dismissing the complaint as well as the compulsory counterclaims in Civil
Case No. 0126, with costs against the petitioners therein, PCGG."
Petitioners contend that the Sandiganbayan should not have nulli ed the writs of
sequestration because there was no need to le a separate action against OWNI, Polygon,
Aerocom and Silangan since they had been included in the list of the ill-gotten wealth of
defendants Jose L. Africa + and Manuel H. Nieto, Jr. in Civil Case No. 0009. Petitioners
cited Republic v. Sandiganbayan (First Division), 1 4 in which the Court held:
"1) Section 26, Article XVIII of the Constitution does not, by its terms or any
fair interpretation thereof, require that corporations or business enterprises
alleged to be repositories of "ill-gotten wealth," as the term is used in said
provision, be actually and formally impleaded in the actions for the recovery
thereof, in order to maintain in effect existing sequestrations thereof;
"2) complaints for the recovery of ill-gotten wealth which merely identify
and/or allege said corporations or enterprises to be the instruments, repositories
or the fruits of ill-gotten wealth, without more, come within the meaning of the
phrase "corresponding judicial action or proceeding" contemplated by the
constitutional provision referred to; the more so, that normally, said corporations,
as distinguished from their stockholders or members, are not generally suable for
the latter's illegal or criminal actuations in the acquisition of the assets invested
by them in the former;
"3) even assuming the impleading of said corporations to be necessary
and proper so that judgment may comprehensively and effectively be rendered in
the actions, amendment of the complaints to implead them as defendants may,
under existing rules of procedure, be done at any time during the pendency of the
actions thereby initiated, and even during the pendency of an appeal to the
Supreme Court — a procedure that, in any case, is not inconsistent with or
proscribed by the constitutional time limits to the ling of the corresponding
complaints "for" — i.e., with regard or in relation to, in respect of, or in connection
with, or concerning — orders of sequestration, freezing, or provisional takeover."
In this case, the PCGG's complaint 1 5 for "Reconveyance, Reversion, Accounting,
Restitution and Damages" against Jose L. Africa, + Manuel H. Nieto, Jr., the Marcos
Spouses, Ferdinand Marcos, Jr., Roberto S. Benedicto, + Juan Ponce Enrile, Potenciano
Ilusorio + was led on July 22, 1987. In the complaint, Polygon, Silangan, Aerocom and
OWNI were included in the list of property as part of the defendants' ill-gotten wealth.
We nd the writ of sequestration issued against OWNI not valid because the suit in
Civil Case No. 0009 against Manuel H. Nieto and Jose L. Africa + as shareholders in OWNI
is not a suit against OWNI. This Court has held that "failure to implead these corporations
as defendants and merely annexing a list of such corporations to the complaints is a
violation of their right to due process for it would in effect be disregarding their distinct
and separate personality without a hearing.'' 1 6
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Furthermore, PCGG issued the writs of sequestration on August 3, 1988, which was
beyond the period set by the Constitution.
Article XVIII, Section 26, of the 1987 Constitution provides:
"Sec. 26. The authority to issue sequestration or freeze orders under
Proclamation No. 3 dated March 25, 1986 in relation to the recovery of ill-gotten
wealth shall remain operative for not more than eighteen months after the
rati cation of this Constitution. However, in the national interest, as certi ed by
the President, the Congress may extend said period.
Footnotes
+. Deceased.
+. Deceased.
1. Under Rule 45 of the 1964 Revised Rules of Court.
+. Deceased.
+. Deceased.
+. Deceased.
+. Deceased.
+. Deceased.
+. Deceased.
5. Civil Case No. 0126.
+. Deceased.
6. Civil Case No. 0127.
7. Rollo, pp. 205-226.
+. Deceased.
16. PCGG v. Sandiganbayan , 353 Phil. 80, 91-92 [1998], citing Republic v. Sandiganbayan , 325
Phil. 762 [1996].
17. Republic v. Sandiganbayan , 355 Phil. 181, 207 [1998], citing Baseco v. PCGG , supra, Note
12, at pp. 236-239, on the scope of the powers of PCGG over properties sequestered,
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frozen or provisionally taken over.